All you need to know about types of employment contracts
Under the UAE Labour Law No. 8 of 1980, there are two types of employment contracts: limited-term (or fixed-term) contracts and unlimited term contracts. The difference lies in the provisions for the end-of-service gratuity and termination. In 2018, the UAE implemented the part-time contract system by virtue of a ministerial resolution.
The Jebel Ali Free Zone (Jafza) is a free zone based in Dubai, United Arab Emirates and, as such, follows the directives of the UAE Labour Law and implements it to all 8,500+ businesses registered with it.
Limited-term (fixed-term) contracts
In general, limited-term contracts mention the start and end dates of an employment period. Unless the contract is renewed, it is automatically cancelled when it expires.
Limited-term contracts are adopted when an employer needs employees to engage in specific projects or specific duration. According to recent reforms in the UAE’s labour market, limited-term contracts are for a maximum duration of 2 years, instead of 4 years, as it used to be. The contract must also include a termination notice.
For more, please refer to Ministerial Resolution No. 765 of 2015 on the Termination of Employment Relations (PDF 150 KB).
Unlimited term contracts
An unlimited term contract is open-ended, more flexible, and commonly used in the UAE. It can be terminated with mutual consent or by giving a notice of 1 to 3 months. The parties involved must honour their obligations throughout the notice period.
Therefore, an employment relationship is deemed to have ended without due process when either the employer or employee terminates the employment relationship without complying with legally mandated procedures.
In this case, the wronged party may initiate legal action and compensation.
Related links from MOHRE:
- Ministerial Decree 764 of 2015: Standard Employment Contracts (PDF, 120 KB)
- Ministerial Resolution No. 765 of 2015 on the Termination of Employment Relations (PDF 150 KB)
In 2018, the Ministry of Human Resources & Emiratisation (MOHRE) implemented a new rule which allows companies to recruit skilled workers from inside the country or from abroad under multi-employer part-time contracts. These types of contracts are limited only to skilled workers, namely holders of university or higher degrees and those who have completed two or three years diploma in any technical or scientific field.
Under this new system, part-time contract employees can take several part-time jobs without the approval of their original or other secondary employers; however, they are obligated to take a permit from the MOHRE.
The part-time contract is subject to the same rules and penalties applicable to the regular employment contracts common in the UAE, whether limited or unlimited.
For more information, please refer to https://u.ae/information-and-services/jobs/types-of-employment-contracts.
As a Jafza customer, you can always speak to your account manager or approach the customer service desk at Jafza for any assistance related to operating your business and matters related to employment.